In August, President Raul Castro warned that layoffs would be coming and said Cuba would expand private enterprise on a small scale, increasing the number of jobs where Cubans could go into business for themselves.

By Alan Gomez, USA TODAY

Cuba's announcement Monday that it will allow half a million Cubans to work for themselves rather than the state was greeted with mixed reactions from U.S. observers of the communist nation.

Jaime Suchlicki, director of the University of Miami's Institute for Cuban and Cuban-American Studies, said it's wrong to interpret the move as a drastic shift toward a capitalistic economy.

Suchlicki said Eastern Europe saw similar slow "creeps" toward capitalism in the past that failed. Only countries such as China, which took large steps toward a true version of capitalism, have had success in their attempts to move away from their centralized economies.

But Philip Peters, Cuba specialist for the Lexington Institute, a Washington-area think tank that promotes free markets with minimal government intrusion, said many of the workers will benefit from the move.

"If this grows, then you start to see a sector that becomes a much larger private sector within the socialist economy and generates a lot of purchasing power," he said.

As a socialist country, the state officially employs 95% of the country's workforce. That means mechanics, barbers, store clerks, waiters and others who work in retail and service industries are paid salaries by the state.

Unemployment hasn't risen above 3% in eight years, according to the regime, but that ignores thousands of Cubans who aren't looking for jobs that pay salaries worth $20 a month on average.

On Monday, the Cuban Workers Confederation, a union controlled by the Communist Party, announced that layoffs will start immediately and continue through the first half of next year. The confederation said Cuba will increase private-sector job opportunities, including allowing more Cubans to become self-employed, forming cooperatives run by employees rather than government administrators and increasing private control of state land, businesses and infrastructure through long-term leases.

The statement did not say which parts of the economy would be retooled to allow for more private enterprise. The confederation said that the state would continue to employ people only in "indispensable" areas such as farming, construction, industry, law enforcement and education.

"Our state cannot and should not continue supporting businesses ... and services with inflated payrolls, and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct," the confederation said. Cubans will soon be "paid according to results," it said.

Castro has permitted small aspects of a free market, such as approving some licenses for private taxis. But Suchlicki said that even though some of those workers will be granted business licenses, little will change for the better until workers are allowed to own their businesses and buy from and sell to foreign companies.

"It's not a market economy. It's a survival economy," he said of a system that has helped make Cuba one of the poorest nations in the Western Hemisphere for decades.

Peters said the change will give workers an incentive to expand their businesses, hire additional employees and maximize profits.

"I'm sure they'll take advantage of it, and I'm sure they'll do well," he said.

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